The Paycheck Protection Program (PPP) was created to help small businesses continue to operate in the face of COVID-19 complications. Its execution, however, has been a mixed bag for many businesses and their tax pros, not always working as smoothly as its creators had hoped.
Still, the forgivable loan program has its fans. And those worried about its impeding March 31 expiration can rest easier.
The Senate last week agreed to the House bill extending the PPP. President Joe Biden is expected to sign it.
When that's done, borrowers will be able to apply for the loans through May 31 and the Small Business Administration will have until June 30 to process them.
More money for solo owners: One reason a Biden signature is a sure thing is that the PPP Extension Act of 2021 (H.R. 1799) has a provision championed by the White House. It makes sole proprietors eligible for more money.
That change, however, ensures that this extension won't be the last piece of PPP legislation. The increase in sole proprietor coronavirus relief is not retroactive, meaning similarly situated business borrowers who had already received the loans got a lesser amount.
Lawmakers already have started work on making the sole proprietor revision retroactive. They decided to go that route so that the PPP didn't expire. If the Senate had amended the PPP Extension Act, the bill would have had to go back to the House for reconsideration and another vote.
And the way Congress operates (or doesn't) nowadays, a second look at a bill doesn't always mean it will be approved again.
Most pleased with more time: For the most part, though, supporters of the PPP are happy with the extension measure. That includes the American Institute of Certified Public Accountants (AICPA).
And that's why the AICPA's Journal of Accountancy gets this weekend's first Saturday Shout Out.
PPP state tax troubles: But, as sharp readers have already noticed, there's a second Saturday Shout Out today.
It goes to the Tax Foundation for its examination of state tax treatment of PPP loans. The nationwide news, as illustrated in the map below, is not as welcome as are federal PPP tax rules.
While Congress chose to exempt forgiven PPP loans from federal income taxation, Tax Foundation Senior Policy Analyst Katherine Loughead notes that, "Many states, however, remain on track to tax them by either treating forgiven loans as taxable income, denying the deduction for expenses paid for using forgiven loans, or both."
Regardless of how your state handles taxation of PPP money, if you find the program will help your business make it through the persistent pandemic, you now have more time to apply.
You also might find these items of interest:
- IRS & Virginia provide tax breaks for PPE purchases
- 6 small business tax breaks in current COVID relief law
- COVID tax credits highlighted by IRS during National Small Business Week
|Coronavirus Caveat & More Information
In 2021, we're still dealing with extraordinary circumstances,
both in our daily lives and when it comes to our taxes.
The COVID-19 pandemic and efforts to reduce its transmission
and protect ourselves and our families means that,
for the most part, we're focusing on just getting through these trying days.
But life as we knew it before the coronavirus will return,
along with our mundane tax matters.
Here's hoping that happens soon!
In the meantime, you can find more on the virus and its effects on our taxes
by clicking Coronavirus (COVID-19) and Taxes.